Armed only with a bucket full of enthusiasm, a wiki full of miss-information and a 2 digit IQ, the good Captain seeks not only to understand the modern world, but also fix one or two bits of kit along the way.

Saturday, 9 July 2016

Ethereum: let's buy Ether

There is no better way of learning something than doing something.

So I decided to create a new wallet and buy Ether.

I found the whole process pretty straightforward, once I had selected the most appropriate place to buy Ether.
This post follows an earlier one about my Ether Bar, which also describes ether basics.

Rather than use my existing wallet (the one associated with my Ether Bar) I decided to start again, and get a new wallet.

Create a Wallet

A wallet is basically just an address to your location on the Ethereum BlockChain (this address is also known as a Public Key). The wallet also includes a Private Key.

However, there are also web wallets and wallet client applications, including off-line wallets. But my example uses none of these.

One of the simplist ways to generate a wallet is to use the website MyEtherWallet.com

This service is completely anonymous and free.

As they say in their Help documentation: "It's not a website where you put your Ether and we store them for you.
We just make it easy for you to save your wallet information in your
browser/on your computer. Then we give you a place [for] you to access that
information and do stuff with it".

You supply a password and end up with the following data which you should save:-

It is a good idea to also save a paper copy, which includes QR codes for Public & Private Keys.

From a security point of view, you should back this data up. All computer hard drives will eventually fail, some after just a year or two, so backup onto USB memory sticks. You should also have "off-site" copies in case your house catches fire!

If you are making a substantial investment in virtual currency (e.g. ether, bitcoin or whatever) it doesn't make much sense to put it all into one wallet. Just as you would spread your savings around in a selection of banks or other financial institutions, so you should spread your [virtual] risk over several wallets.

Research potential suppliers

You probably need to start by looking for an Ether supplier that meets your needs. In my case I wanted to buy in Sterling using either a credit card or online banking transfer.

After a bit of research, including checking several online reviews, I settled on a UK based site: Bittylicious.

As you can see from the web page above, using Bank Transfer is considerably cheaper than the alternatives.

If you decide to use this site, I suggest you follow the Bitcoin Buying Guide for instructions on how to purchase Ether from Bittylicious.

As mentioned in my earlier post, once you have completed your purchase, you can check the status of your wallet via etherscan.

Transfer funds between wallets

So now I can transfer Ether from my new wallet to the wallet associated with my Ether Bar. For this I used the "Send Transaction" tab on the MyEtherWallet.com website.

This is where you get to use your Private Key:-

Once you have entered your Private Key and selected an amount, you enter the destination address to complete the transaction.

Note that there is a cost for each transaction (see the note in the image above, bottom right-hand corner). All you need to know is that the Gas Price is a fee that is paid for using the Ethereum Virtual Machine. The additional GWei is 1 billionth of an Ether.

Anyway, I've calculated that the cost to me of moving 0.01 ether from one wallet to another was about one third of a penny. I assume this is a standard transaction fee (i.e. may be similar for larger amounts of transfered funds) but you might want to check this using an online calculator.

A good time to buy?

I have no idea what the ether will do next, so treat this post as an experiment, not as investment advice.